ARTICLES
Should common law jurisdictions adopt the narrow doctrine of unconscionability? Adelle Yii, University College London Introduction Singapore has long grappled with the issue of whether the doctrine of unconscionability should be given limited application or whether a broader doctrine should be adopted. In the recent case of BOM v BOK (“BOK”)1, the Singapore Court of Appeal upheld the narrow doctrine of unconscionability and set aside a deed of trust. While the narrow doctrine adopted in Singapore shares similarities with the position in the United Kingdom, the Singapore Court of Appeal further developed the test to apply to modern situations. Firstly, the Court must first consider whether the purchaser was poor or ignorant and secondly, establish whether the purchase was considerably undervalued. Lastly, the Court must determine whether the purchaser obtained independent legal advice prior to the purchase. The doctrine is narrow as it holds the applicant to a high standard of proof in relation to the law of evidence, such that only exceptional circumstances will qualify as unconscionable conduct. Where an agreement is unconscionable, it may be set aside by the Court such that parties will be free from their contractual obligations. This article will briefly set out the origins of the narrow doctrine and the way in which it was adopted in Singapore. As a point of contrast, the broad doctrine adopted by the High Court of Australia will be discussed, although it is pertinent to note that the broad notion attracted much criticism in BOK. It is posited that although the adoption of a narrow doctrine carries its own set of disadvantages, the Court of Appeal in Singapore rightly restricted its application in order to maintain legal and contractual certainty.It is further argued that other common law jurisdictions 26
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[2018] SGCA 83.
should consider moving towards the narrow conception of unconscionability. This article comprises of seven sections, beginning with the narrow doctrine of unconscionability adopted in the United Kingdom. This sets the foundation and allows for developments made by the Singapore Court of Appeal in the adoption of the narrow doctrine to be highlighted in the second section, through the test set out in BOK. The third section will then briefly set out the broad doctrine of unconscionability adopted in Australia, given that the test applied differs greatly from that in the United Kingdom and Singapore. Once the background and seminal cases have been laid out, the fifth and sixth sections of this article will examine the advantages and disadvantages of the narrow doctrine of unconscionability. This provides a foundation for the comparative assessments of whether Australia should consider adopting the narrow doctrine and in turn, whether Singapore should adopt the broad doctrine of unconscionability. Foundations of the Narrow Doctrine The narrow doctrine of unconscionability has been established in two seminal cases the United Kingdom – Fry v Lane (“Fry”)2 and Cresswell v Potter (“Cresswell”).3 In Fry, the Plaintiff assigned shares left under a will to the Respondent upon the advice of an inexperienced solicitor who acted for the Respondent. It later emerged that the transaction was considerably undervalued, and the shares were worth far more than their sale price. It is germane to note that an undervalued transaction in itself was insufficient to set the assignment aside and unfair dealing had to be 2 3
[1888] 40 Ch D 312 (Ch). [1978] 1 WLR 255 (Ch).